A cheerful spot up on the mountains from where I like to look at the world..

Monday, December 04, 2006

Retail Retail Everywhere!

First Reliance goes retail. Then, Walmart comes in. Now the Birla group is getting into retail. Pantaloon retail is here too. Great times for the Indian market. Not so great times for the small time retail stores. Walmart has the history of wiping away the small players when they enter a market. Not so great times for suppliers too. The bargaining power of the retail stores as big as these ones will become extremly high. Supplier profit margins will drop. It will be interesting to observe what happens over the next 5 years in the retail sector in India. I can imagine the kind of goodies that will now enter India, if the Indian version of the Walmart is anywhere close to the American version. Chinese imports will flood the stores from now on. Buying power of the people will increase now.

I wonder how the positioning of each store will be. Walmart will be the lowest on price undoubtedly. They have to maintain their world-wide image. Will Reliance and Birla retail stores position themselves like Target (higher priced, more stylish stores)? I would also be interested in seeing how Walmart will tackle the problems associated with having the lowest prices. In India typically there is a mentality of the elite/middle class to avoid shopping at the same place where the so called lower masses shop. Then again, I don't think Walmart would be too bothered as long as it gets its required volumes. The lowest prices would definitely leave out certain sections of the population which might become a concern in the coming years when the middle class is growing and the lower masses are reducing.

4 Comments:

While it is interesting to see how the retail scene is playing out, a few things that keep coming up in my head:1. As much as my mom shops at places like Nilgris (Chennai) or Subhiksha she prefers the convenience of the store at the end of the street for the efficiency and price(goods ordered over the phone be it as small as a tube of paste is at home in 15mins)2. In Chennai the presence of Saravana Stores (My cousin called it the Walmart of Chennai!) may be a big competitor

Walmart needs to price things only a little lower than the others to see big volumes. And most of its buyers are likely to be from our middle classes -- not the poor ones who need things in small chunks.